A3469. Amends Fiscal Year 2013 annual appropriations act to prohibit application of budget adjustment factor when determining Medicaid reimbursement rates for certain nursing facilities.

Summary

This bill concerns the distribution of Medicaid reimbursements for nursing facilities. The bill amends language provisions in P.L.2012, c.18, the annual appropriations act for State Fiscal Year 2013, so that a budget adjustment factor is not applied to nursing facilities that have Medicaid case mix occupancy rates of at least 80 percent and final reimbursement rates that would be in the lowest one-third of all nursing facilities in the State receiving Medicaid reimbursement if the budget adjustment factor were applied uniformly. In order to offset the cost of these rate increases, the bill requires that the budget adjustment factor continue to be applied to those nursing facilities not included in the group of facilities that have Medicaid case mix occupancy rates of 80 percent or greater according to the most recent facility cost reports and that would have final reimbursement rates in the lowest one-third of all nursing facilities Statewide if the budget adjustment factor were applied. The Fiscal Year (FY) 2013 annual appropriations act includes the following provisions regarding Medicaid funding for nursing facilities: 1) the per diem reimbursement rate for each nursing facility is not to be less than the per diem rate last received by that facility for FY 2012; and 2) per diem reimbursement rates for nursing facilities will otherwise be calculated according to the rate-setting methodology adopted in FY 2011 and codified under N.J.A.C.8:85-3.1 et seq. Under this methodology, a significant portion of the reimbursement rate for each nursing facility is determined by the facility's direct care costs and capital costs. The methodology also imposes a budget adjustment factor, which has the effect of further reducing reimbursement rates for many facilities so that total spending does not exceed the total amount available for nursing facility reimbursements. Although the FY 2013 annual appropriations act increased State appropriations for nursing facility reimbursement rates by $15 million above the FY 2012 appropriations, this increase does not fully offset a $25 million reduction in State appropriations for reimbursement rates and other reductions that occurred in FY 2012. Under the State's current rate-setting methodology, certain nursing facilities have experienced reductions or limited growth in reimbursement rates since FY 2011 due to low direct care costs and capital costs, which affect the initial rate setting, and the budget adjustment factor, which further reduces reimbursement rates. Some of these facilities serve high proportions of Medicaid clients and cannot easily reconcile growing costs with reduced or flat reimbursement rates by shifting costs to non-Medicaid clients. This bill supports nursing facilities with low costs and high proportions of Medicaid clients by preventing the budget adjustment factor from being applied to those facilities.